The EU Emissions Trading Scheme (ETS) is a world first and a major weapon in Europe's fight against climate change. The innovative system has turned carbon dioxide emissions into a tradeable commodity. They can now be bought and sold like any other of the thousands of products traded on world markets today.
The scheme works by placing a limit or a 'cap' on the amount of carbon dioxide participating installations - currently around 10,500 across the European Union - can emit every year. If an installation emits more than its allowance, it must either pay a very hefty fine or buy surplus allowances from companies that have managed to stay below their limit. The system ensures that overall CO2 emissions from the plants covered are cut in the most cost effective way.

The Earth is rapidly getting warmer, threatening serious and even catastrophic disruption to our societies and to the natural environment on which we depend. Over the course of the 20th century the average temperature increased by around 0.6 C globally, by almost 1 C in Europe and by no less than 5 C in the Arctic. This man-made warming is already having many disruptive effects around the globe.
Sea levels are rising as a result of melting glaciers and ice sheets, threatening to flood low-lying communities. Extreme weather conditions; floods, droughts, storms are becoming more severe, more frequent and more costly in some parts of the world. And many endangered species may be pushed to extinction over the coming decades as climate change affects their traditional habitats.